Provision Management

WHAT DOES IT MEAN?

Appello Provisioning System is designed to calculate EIR and Amortization of fees and commissions, provide business rulebased automatic segmentation of exposures to portfolio / individual and automatic / manual provisioning tracks and calculate provisions based on hierarchically built calculation rulesets. Parallel calculations are possible for local accounting standards and ifrs (ias 39, later ifrs 9), as well as test runs with modified rules or exchange rates. Manual provision setting and dcf-based calculation of manually given repayment schedule are also supported.

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MAIN BUSINESS BENEFITS

EASILY ADJUSTABLE QUESTIONNAIRES AND SCORING MODEL

Questionnaires and scorecards can be flexibly and periodically adjusted to reflect regulatory requirements ot to credit policy changes. Business rules are set up in the Rule Engine of the ApPello WebDP platform. There is a strong support for managing Retail scorecards. Features such as champion-challenger, waterfall reporting, vintage analysis are also enabled.

FLEXIBLE PORTFOLIO SEGMENTATION

The segmentation of the exposure portfolio to different (portfolio / individual; automatic / manual, segment-based) provisioning tracks is controlled by business rules. Based on the client segment, client groups, exposure size or other parameters the rules determine the allocation of exposures. The segmentation rules can be flexibly managed by risk administrators who can configure the input parameters and the decision rules from the user interface. Exception handling (e.g. excluding certain loans from the process) is also supported.

SUPPORT FOR MULTIPLE ACCOUNTING STANDARDS INCLUDING IFRS

The system is designed to calculate credit impairment for different accounting standards in parallel, for example the local accounting standard, IFRS (IAS 39 or later IFRS 9) and group regulations. The system supports IFRS requirements like using Effective Interest Rate (EIR), Discounted Cash-Flow (DCF) based calculation on manual repayment schedules, IBNR category, fair value and the unwinding effect.

HIERARCHICALLY BUILT, FLEXIBLE BUSINESS RULE-BASED CALCULATIONS

Provisioning calculations are defined entirely in business rules, which are completely separated from the application’s source code. So whenever a change is needed in the calculation process, it can be done by the risk managers without programming. Rules can be different for each accounting standard or for client segments. Any changes are versioned. The system supports the analysis of what-if-scenarios and running test rounds before moving a new calculation version into live operation. The algorithms are hierarchically built, rules broken down to calculation steps for easier overview. Calculation of exposure value, coverage value, base provision, correction factors and coefficients are managed in separate steps.

WORKFLOW SUPPORT FOR MANUAL PROVISIONING AND APPROVALS

For exposures under manual provisioning treatment, the system builds up and assigns a personal task list to the users involved. A multi-level approval process can be set up separately for any provisioning track, e.g. for individual, manual provisions one by one, individually or on some level of aggregation for automatically calculated individual loan loss provision, as well as for portfolio loan loss provision. Apart from that, provisions calculated for any individual exposure can be tracked down with a drill-down functionality that helps identify errors or causes for excessive values.

SUPPORT FOR BOOKING

For approved provisions, the system generates postings to the General Ledger. Postings can be parameterized even on the customer, transaction or currency level.

Appello Debt Collection System is a highly flexible solution for the automatic (risk-based) or manual segmentation of outstanding loans and registering the execution of the different collection strategies defined by the segment through phases of early (soft) and late (hard and legal) collection. It also supports rescheduling or restructuring in connection with the bank’s other systems.

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